We’re in that beautiful part of the year where the kids are starting to swim on the weekends and we get the occasional windy day reminding us that the seasons are changing.
Transitioning from Spring to Summer means that we’ve got a couple more months before monsoon season takes over the weather reports and people start to move entertainment indoors.
For now, festivals are in full swing, patios are packed for brunch and we’re holding our breath for when it gets just a little too warm for exploring outdoors. Much like the real estate market, we know that change is coming and are taking advantage of every last opportunity before it does.
While supply remains top of mind for Valley buyers, we are starting to see a very slight increase in the number of available homes with fewer coming from new construction in the East Valley than our West Valley counterparts.
To put the numbers into perspective, Gilbert has 118 single family homes available for sale. While this number is trending up from the number we had available this time last year, it is nowhere near what we need to satisfy current demand.
Keep in mind, the Women and Children’s Pavilion known to many as the Mercy Gilbert Hospital expansion project will support 1,000 new jobs when fully operational – nearly 10 times the current availability of single-family homes in its home town, and that’s only ONE of the major Gilbert employers projecting employment needs in 2022 and beyond.
Despite the continued hope by buyers that home prices will fall in the near future, simple supply and demand would indicate that until there are more houses than people who want to buy them, we will continue to see price increases above and beyond our current average Gilbert home price which has crossed the $600K threshold beating the valley average by just over 5%.
While demand has fallen nearly 15% in the last 60 days due to rising interest rates and rapidly increasing home prices, we are still sitting at just above normal demand with 76% lower inventory than is normal for this time of year.
Doing the math, that would mean our demand would have to fall well below normal before it could start to have an impact on available supply which in turn would have to increase nearly five times in order to bring our market into balance.
For most, the impetus of moving is to leverage the equity in their primary home or to get into a home that better suits their needs and every day after today will put us closer to that balanced market with slower appreciation expected from your purchase.
Being the slow-moving train that real estate is, we’ll have to shore up that gap between supply and demand before we’ll start to see the price of homes impacted which means if you want to build up the nest egg that you have in your current home in your next, the sooner you trade up (or down!) the sooner you start building that bank account.
Again, looking in the rearview mirror for where we could be headed in the future, Gilbert’s annual $/sf appreciation is nearing 33% as compared to just 6.8% two years ago. While we all love what five times the appreciation has done to our equity, it isn’t real until you put it to work for you.
Median average days on market is still just a couple of weeks in Gilbert and homes are selling on average 2.67% higher than list price so while we know it can’t stay this way forever, it’s still just the occasional windy day that reminds us change is coming.
For a long time, Arizona flew under the radar with home prices reflecting the way that we felt about our scorching summer and lack of beaches rather than our 9 months of perfect weather, massive employment opportunities, exceptional outdoor recreation facilities, and designer clubs and spas for vacationing but we’ve started to catch up.
For native Arizonans, this can be a hard pill to swallow but not many thriving towns like ours are seeing declining home values – and that’s not really what we want either, is it?
Affordability is and will continue to be an issue, but plummeting home prices? Probably not.